The Federal Trade Commission sued U.S. Anesthesia Partners, one of the nation's largest anesthesia providers, and its private equity owner Welsh, Carson, Anderson & Stowe for allegedly consolidating its practices in Texas to drive up prices for patients.
The FTC filed a complaint Thursday in the U.S. District Court for the Southern District of Texas alleging that the company created a monopoly by buying up nearly every large anesthesia practice in Texas, made price-setting agreements with remaining independent practices and struck a deal with an unnamed competitor to keep it out of the market.
The agency seeks, in part, a permanent injunction preventing any alleged anticompetitive conduct.
Related: Study: Private equity linked to higher anesthesia costs
Private equity firms have been rolling up physician practices across the country, systematically picking off different specialties. The trend has drawn concern from regulators and healthcare economists, who have warned that some private equity firms prioritize profits over patient care.
FTC Chair Lina Khan said in a news release that Welsh Carson created the company to “rake in tens of millions of extra dollars for these executives at the expense of Texas patients and businesses,” and that the commission will continue to scrutinize “serial acquisitions and roll-ups.”
A Welsh Carson spokesperson said in a statement that the case is unwarranted.
U.S. Anesthesia Partners, which on its website says it has 4,500 clinical team members that work in 700 inpatient and outpatient facilities in eight states and Washington, D.C., denied the allegations. Dr. Derek Schoppa, a practicing physician and board member at U.S. Anesthesia Partners, said in a statement the complaint is “based on flawed legal theories and a lack of medical understanding.”
New York-based Welsh Carson started the company in 2012 and has acquired and combined anesthesiology practices across a number of states. The complaint alleges that in Texas, which accounts for about 65% of the company's revenue, the private equity firm would eliminate competition and raise prices by acquiring small anesthesia practices and consolidating them in metro areas.
The complaint also alleges the company worked with competitors to divide the Houston, Dallas and Austin anesthesia markets in Texas among them. In addition, U.S. Anesthesia Partners and independent practices allegedly would agree to allow the company to bill payers, making it appear that it was doing the work of the independent pratices' anesthesia providers, according to the complaint. The company would allegedly receive much higher reimbursement rates and share a portion of the mark-up with other practices.
The FTC had been reportedly investigating the company since last year, according to the Wall Street Journal. The probe was partially driven by studies that found private equity-backed practices tend to charge higher prices than independent practices.
A 2022 peer-reviewed analysis of six years of data published in JAMA Internal Medicine found hospital outpatient departments and ambulatory surgery centers served by private-equity backed anesthesia companies raised prices by an average of 26% more than facilities served by independent anesthesia practices.